Tom McManus, CEO of KegWorks, has worked to build a global, multi-channel, multi-brand corporation committed to “everything in the bar except the alcohol,” including their Line Logic and Behind the Bar brands.

Tom and Michele, both leaders in Entrepreneurs' Organization in Western New York, compare notes often. As ecommerce changes customer behavior and the lines between B2C and B2B blur, Tom sheds light on trends that will impact sales and marketing.

KegWorks started in B2C, moved into B2B, and are a front runner in opening sales channels. What are your criteria for new opportunities?

In B2C, our core is our website, but we’re also in Amazon, eBay, and now WalMart. These are the ones we’ve chosen to pursue.

In B2B, these are certainly more consultative. If you’re in a bar that’s opened in the last five years, chances are those are our foot rails. Our salespeople work directly with architects, mill workers, and GMs. We also sell draft lines directly and have just opened up a services division for new or existing bar lines.

What marketing KPIs do you use to gauge success?

In B2C, we use:

Web traffic

Margin

Average order value

Conversion rates

Working with our web sales team, we dig a little deeper into:

PPC ROI

Mobile vs. desktop conversion rate

Traffic source

Amazon is a little goofy—it skews our results—but necessary. Amazon Prime changed ecommerce—you just have to be there. eBay is dying a slow death, so we’re watching that carefully. WalMart is new for us, and we’re watching the data carefully to set expectations.

In B2B, we’re watching:

Sales targets

Margin

6-week pipeline—this is a good leading indicator for our weekly sales targets

In changing channel strategy, what should you consider?

We run separate income statements by channel with overhead allocation to determine if a channel is not performing at our expected level at the top and bottom line. In ecommerce, shipping can make it difficult to figure true margin—it’s something we keep an eye on. We try to factor in the soft costs of shipping, as the added 2-3% can contaminate gross margin.

KegWorks’ retail store in Buffalo, which we recently closed, was a great example of hard decisions driven by data. It was wonderful, but a dog when you factored in not just hard costs but mindshare. From marketing to inventory to accounting, brick-and-mortar stores are expensive, but the real cost was the distraction. We had to determine the ROI on mindshare. It was the right decision.

What surprises you?

How fast it changes. Best practices change all the time. Last year’s SEO best practices are now grey or black hat. In B2B, the sales process has changed entirely to match the customer experience. There’s so much noise.

Are B2C and B2B customer expectations merging?

In some ways, yes. Purchasing is now starting their research just like a consumer—they Google it. Companies need to be doing pay per click (PPC). I’m surprised at how many manufacturers and startups aren’t doing PPC on their own name. This is actually our highest converting ad.

Amazon has changed everything. We used to call Microsoft, then Google, the evil empire. It’s Amazon. It’s a race to the bottom on price, and it has accelerated both shipping expectations and product lifecycles.

Competition on a new product is immediate—not a couple of years. You can’t live as a distributor alone anymore. Someone in pajamas in their basement playing arbitrage can undercut you on price. Creating our own product lines has made all the difference in creating competitive advantage.

Tell me about the decision to spin out the Behind the Bar brand.

No matter how strong our marketing, we couldn’t convince customers that KegWorks meant more than beer. We’re the top distributor of high end bitters in the US, but we weren’t known for our extensive craft cocktail ingredients and bar tools.

We let the data drive the decision. We dug into the research, did extensive polling and sought secondary research on market size, then worked with a branding agency for naming and the creation of customer personas.

Certainly, the Behind the Bar launch. We’re also recommitting to email marketing. The marketing metrics were phenomenal on this last year. We’d gotten a little lazy, thought email was an outdated tactic, but we cleaned and scrubbed the list and got into the metrics. From the welcome message to cart abandonment and promotional emails, we’re getting smarter about how we approach email.

Customer segmenting and drip marketing are our big push for this year. “If this, then that” and being in tune with what interests our customers.

Sales force automation (SFA) is hot on our radar as well. There’s so much noise in the sales channel. We’re analyzing and addressing the holes. Our customer base is wide, and we can automate some of those touch points.

I think there are opportunities for content marketing in both the cocktail world and in B2B sales. We can steer traffic and help them get to their destination faster with microsites. [Editor’s note: Read about a company that does a great job at B2B inbound marketing.]

With complex sales channels and multiple touches, it’s a challenge to credit a single source for a sale, and to compensate sales teams properly.

What’s next?

Shorter product lifecycles.

Mobile hasn’t scratched the surface yet—it’s not converting at the level of desktop. Sadly, we’re in a heads-down society, and mobile search will increase in impact to B2C and B2B.

The second-screen or multi-screen phenomenon will have an impact as well.

Traditional tactics like handwritten thank you notes will stand out—I try for five a week.